You are here

SOCY 151: Foundations of Modern Social Theory

Lecture 13

- Marx's Theory of Class and Exploitation

Overview

In order to move from a theory of alienation to a theory of exploitation, Marx develops a concept of class and of the capitalist mode of production. He developed these in The Communist Manifesto, the Grundrisse and Das Kapital. Marx argues that what sets the capitalist mode of production apart from the commodity mode of production is not only the accumulation of money; the capitalist mode of production is characterized by the use of labor power as a commodity to create more value. The capitalist compensates the laborer enough for his labor power to reproduce the commodity (the labor power), but the laborers’ power produces additional value: a surplus value for the owner. The worker is exploited when he does not keep or control the value created by his own labor power. Marx argues that the capitalist system forces people into one of two classes: the bourgeoisie and the proletariat. This class dichotomy did not describe accurately social structure in Marx time, when a sizable class of self-employed existed. Marx predicted that this “middle class” will disappear; instead it grew in size over the twentieth and twenty-first centuries.

Lecture Chapters

Foundations of Modern Social Theory

SOCY 151 - Lecture 13 - Marx's Theory of Class and Exploitation

Chapter 1. The More Familiar Karl Marx [00:00:00]

Professor Iván Szelényi: Good morning. So we got to the end of Karl Marx today. And after a long detour we are finally at the Marx you are probably the most familiar with, or the kind of Marx you have heard the most about. The major– my major aim so far in this course was to shake a little the stereotypes which was in your head about Marx, to show you that Marx was a much more complex thinker, full with contradictions, and in a search for truth. Whether he arrived at truth, that’s another question, but he was desperately searching for it.

So we went around different epochs of Marx. Right? In The Paris Manuscripts, the first attempt to write a big work, we saw him as a Hegelian. The central concept is still alienation, a Hegelian concept. Then he breaks away. Right? He turns into a historical materialist in The German Ideology, but does not quite get it yet. Right? Too much under the influence of Adam Smith. The division of labor is still important and private property does not get the centrality of the analysis, what it’s supposed to have for the theory. Then you read the Grundrisse, in which he kind of–now private property is in the central place, but he tries to bring back the idea of alienation. And he also considers that in The German Ideology he became too deterministic; history is more open than he may have believed.

And then finally he finishes the book–at least the first volume of the book he always wanted to write–Das Kapital. And in the Kapital, only the first volume was finished by him, and it was the only first volume what he thought was ready for publication, and came out in 1867. He offers a very coherent, very cogent argument. It’s not a messy text like the Paris Manuscript or The German Ideology or the Grundrisse. Marx felt this is ready to be printed; and it was ready to be printed for sure.

And this is now his major contribution, the theory of exploitation. That is undoubtedly Marx’s major contribution to social theory. Whether it is right or wrong, this is another question. I think there are few people who would accept his theory of exploitation the way how it was formulated. But there are still quite a few theorists around here who are attracted to the idea of exploitation and try to re-conceptualize the notion of exploitation in one way or another. And it’s also something which has very much entered the public discourse. You yourself use it. Occasionally you feel I have been exploited. And it actually has quite a bit to do with what Marx thought about exploitation, when you say, “This is an exploitative relationship.” Right? So the term is with us.

Okay, then of course in order to have the theory of exploitation, this is necessary for Marx to have a tight conception of the theory of classes. And the text I asked you to read for his theory of classes is an old text, much precedes the theory of exploitation, The Communist Manifesto. It’s also only a pamphlet, it is a political pamphlet. It’s not aimed for a scholarly audience. It does not argue its case in the scholarly way, as most of the argument is put forward in the chapters I asked you to read from Kapital. Right? But it has very important theoretical insights. In fact, though Marx does not have the theory of exploitation, he still comes very close to a mature class theory.

What is interesting though, today we identify Marx as certainly one of the great theorists who created the idea of class. The other one is, by the way, Max Weber. What is also interesting about both of them, that they never wrote any coherent analysis what class is. Well in The Communist Manifesto, Marx and Engels write a fair deal about class, but they don’t have the conceptual apparatus yet really to do it right. And by the time he has, after he finished the first volume of Kapital, he actually makes an attempt, what eventually was published by Engels as the third volume of Kapital.

And here, in chapter 52, he said, “Now this is time to write my theory of class.” He writes a page and a half, and then he abandons it. He said, “I can’t do it; too difficult.” Right? So it leaves to you–right?–and the next text– test in this course, to figure out what the right theory of classes are, and what’s wrong about it. Right? In fact, Weber is pretty much in the same bind. He writes a little more than one-and-a-half page, but not much more. We will talk about this when we come to Max Weber. But classes certainly still do haunt us. Right? We cannot get the idea of class out of our hair. Even in the United States the notion is around us; though there is no other modern society which is so free from the idea of class and exploitation as the US of A. But even in the US of A, we still talk at least about the middle class. So the term is not completely alien from us.

Okay, so let’s jump into this, and let’s do it this time in a reverse order–that I start with the mature theory, 1867, and then informed by this theory I go back to 1848, The Communist Manifesto, and deal with this. So the major themes for the lecture today is I want to elaborate on the theory of exploitation in Marx, his idea of classes in history, and finally to ask the question, how many classes are there? Marx seems to have contradictory answers to this question. And this is certainly a question which still fascinates people who are studying society, social stratification or class structure. Of course the answer seems to be obvious probably to most of you. Yeah, in the United States there is one class, the middle class; we are all middle class. Right? That’s the typical American answer to this. But for an analyst it’s a bit dubious answer; if there are classes, how on earth there is only one? Anyway, we will talk about this a great deal.

Chapter 2. Theory of Exploitation [00:09:14]

So let’s move to the question of theory of exploitation. And I will have to start this with the labor theory of value, and to go back to Adam Smith and to see how Marx is proceeding. Then I want to make a step further, Marx’s distinction between commodity production and the capitalist mode of production. This is again taking his point of departure as Adam Smith’s, Adam Smith’s idea of commercial society. And what Marx does, well there are different types of commercial societies. One he calls the petty commodity production, and the other one capitalist mode of production. As we all know, he never used the term capitalism. He comes the closest to this concept by using the term capitalist mode of production. Neither Smith nor Marx had the concept of capitalism, as such.

Then in order to understand what is unique about the capitalist mode of production, we have to understand Marx’s theory of labor power as a commodity. And I will explain to you why this is so central to Marx’s theory of exploitation, and then Marx’s theory of class. Okay, so that’s about it.

And now the labor theory of value. The point of departure is John Locke and Adam Smith. Right? As you recall, already John Locke suggested that all value is created by labor; or, I mean, he’s a little more cautious, at least 90% of all value is created by labor. How on earth he comes up with this figure? He’s not very accurate about this, not very forthcoming. Right? Social scientists today would be a bit upset. “Where do you get this number from?” Right? He doesn’t tell us. But the bottom line is well taken. Right? You remember clearly–right?–his wonderful proposition. “The water in the well belongs to everybody. But who doubts that those who fetch it–the water–that water belongs to him or her? Because it is his or her product, labor product. And what is the value of that water, what you are carrying away from the well, what you did fetch from the well? Exactly the amount of labor you had to put in, in order to fetch that.” Clear, right? A nice theory of property–right?–and a nice labor theory of value, though it’s not quite called this way by John Locke. But so is by Adam Smith.

And, as you recall, Adam Smith claims at one point, “All value is created by labor.” Well but of course Adam Smith, when he comes to explaining the distribution of wealth, takes a step back from this proposition. And we discussed that when we discussed Adam Smith. Let me just remind you what the step backward. Right? The tension–right?–in Adam Smith was that on one hand he claims all value is created by labor, and then when it comes to the question but how is wealth or income distributed. He said, “Well it ought to be distributed between the three factors of production–right?–labor, capital and land; wages, profit and rent. And they have to be equally distributed in a just way, between these three factors of production.” Right? And I think you remember we clarified that this is not a contradiction in Adam Smith. Somehow when he’s claiming that all value is created by labor, he almost has a theory of human nature. Right? That in the state of nature, when there is no private property of land, and there is no accumulation of capital, then all value is created by labor. But this is just in this imagined–right?–natural conditions of existence.

In all complex societies private ownership exists and private–and capital is being accumulated. And then, you know, in order to get production going, the capitalist has to rent–give capital, advance capital, to the worker. Without the advancement of capital, the laborer would not work. And therefore the owner of capital has due claim for part of the value which is created in the process of production. Because it took risks–right?–by offering its capital, and it had to supervise the labor process, and wants to have compensated for its risk taking and its supervision. And you could not operate without land, without a site. All activities need a site, and if somebody owns that site, they’ll have to be compensated that you are on the site; and that is rent.

Well this is a little more problematic in Adam Smith. You know, for capital he makes a pretty strong case, you know, why it is fair for the capitalist to collect profit. For the owner of the land, he–they are collecting rent. That’s a little more problematic, whether rent is also something, a just income. And we all have a little unease–right?–when we are talking about rent, or when we are talking about, for instance, rent-seeking behavior. Right? That sounds a bad behavior, if somebody’s seeking rent. Right? The reason is simple; because we associate in our mind rent-seeking behavior with monopoly. Right? Rent-seeking behavior comes from monopolistic ownership, and we don’t particularly like monopolies. Right? We want competition, free competition–right? Free markets, and not monopolies. Right? Monopoly’s a bad word. Anyway, this is a little of a problem. But nevertheless I think his fundamental point, in Adam Smith, that there is some fair distribution of income between the three factors of production, because they are all necessary for the production for the production process.

I just suggested that, in fact, there are still people, scholars, who are seriously interested in the theory of exploitation today. They usually abandon the labor theory of value. I have not met yet an economist or political economist, or even a sociologist or political scientist, who still believes in the labor theory of value. Right? So now therefore when they try to construct a theory of exploitation, it is more around the theory of rent, rather than labor theory of value.

Okay, then let’s move further and let’s try to figure out how–what Marx does to Adam Smith, and how he radicalizes Adam Smith. Marx does not want to go the Adam Smithsian way, to say there is a fair distribution of wealth between the three factors of production. First of all he asks the question, okay, what is value? And he defines value with this very simple equation. C is constant capital. Right? Constant capital means the capital which is advanced by the capitalist in order to make the labor process possible. Constant capital can of course involve the improvement on the land, on the site what you are using for your production process. Right? If there is a building put up on a site, the cost of the building will have to be returned in the process of production–right?–and therefore it will also contribute to the value of the product.

V is variable capital. Variable capital means wages. And S is what he calls surplus product. This is–you produce a product, you sell it. It is not enough for you, in order to be and stay in business, if all what you collect a return of the capital you advanced for the production, and the wages what you paid to your laborers to complete the process. If you would do that, you would be done. Right? All smart entrepreneurs want to generate some surplus. They want to get a little more than they started with. Otherwise why on earth would they waste their time on this? Right? Why on earth would they take risks? Why would they spend their time supervising the process? Why would they start worrying whether this will work out or not? They need a surplus. So therefore that is the value of the product. Now, and here it is. Right? Constant capital is investment.

And here there is an agreement–right?–with Adam Smith. Right? You have–right?–factors of production. But Marx wants to be consistent–consistent in saying that all value is being created by labor. And he said, “But what is constant capital? Where does constant capital come from?” He said it is coming from labor. It is accumulated labor. It is labor which was actually performed before capital accumulation, was appropriated by the capitalist, and it is being now used as constant capital. So there is, one argument is, all capital was at one point a product of labor, and that is what is your investment. As I said, variable capital are wages. And then there is surplus product. And that surplus product, Marx argued, is also the outcome of the labor process and the product of the laborer as such.

So Marx starts to shy away from the idea that there is a kind of fair distribution between capital, land and labor. He said, “No, I mean, all value is being created by labor.” So this is his kind of reconstruction of the labor theory of value, and leads us into the idea of exploitation. Right? I will labor on this in a minute, to try to put more meat on it. But the essence of exploitation is that what the capitalist will advance is actually labor which was appropriated from the workers in an earlier cycle of the production, and then the capitalist will pocket the surplus, will not give any to the worker; a worker will be satisfied with the wages. And this is where exploitation comes from. Right? Exploitation somehow has to do with what the capitalist had to put into the production process. Right? Constant capital and variable capital, and how much he pocketed after the process was over. So there is no–nothing fair about this, in Marx’s view.

This is–right?–the big difference between social democratic trade unions who wants to keep the capitalist system going; they just want to have collective bargaining and negotiation–right?–with the employers, so to have a reasonable level of profit to the capitalist and a reasonably high level of wages for the workers. Marx said, “Well there is nothing reasonable. This is a system, an exploitative system.” Well, and this is what I said: “The rate of profit will be the surplus divided by the expenditures.”

Okay, let’s move a little further and makes–and let’s have this important contribution what Marx makes between petty commodity production and capitalist mode of production, right? It’s trying to sort of break up Adam Smith’s idea of commercial society or market economy or capitalism. Marx seemed to have a more complex notion. Well he said this is petty commodity production, and he again offers us a little equation here. He said petty commodity production begins with a commodity, and then you go to the marketplace, sell this commodity for money, in order to purchase a commodity. This itself is commercial society. This is commodity production. But it is not capitalism. Right?

This is why Marx, for instance, was a bit uncertain, and he’s rambling about this a little. Is the United States, in the early nineteenth century, really a capitalist economy? And he was puzzled by this because the overwhelming majority of Americans were actually involved in self-employment. It was a highly commercialized society, a highly developed market economy, but there was relatively little private capital accumulation. Most people were farmers or self-employed artisans or merchants. And what did they do? They did produce commodities. You were a shoemaker, you produced a shoe. But you were specializing in shoemaking, and you did not bother you try to also raise chickens and to have eggs. So you needed eggs. So you brought shoes on the market, you sold the shoe for money, and then you went to the farmer and you bought egg, so you could have your scrambled eggs. Right? Okay, that is petty commodity production. Right? And the purpose of production–this is a very important proposition by Marx–is satisfaction of needs. Right? You are operating, you are producing stuff because you have certain needs what you want to satisfy, and the production of some good, well in excess of what you need, has the purpose to satisfy other needs what you have, and money is simply a mediator to make sure that different types of needs are being properly exchanged on the marketplace. Right?

Now Marx here is way beyond Marx of the Paris Manuscripts–right?–who tried to identify markets and commodity exchange as the source of alienation. There is nothing alienating about this process. Right? Now but then he said well capitalism is a different ballgame. We are talking about a capitalist economy when the cycle starts with money. And though, I mean, the chapters you have read, Marx tries to discipline himself. He tries to really behave and to be a scholar. Right? But he can’t resist. Right? His emotions–right?–and his values are too strong. So he said, “Your moneybag,” talking about the capitalists. He should not have said so. Right? He could have done this coolly, objectively, simply to say, “Well, we have an economic system in which we have–right?–people who accumulated capital, and they are entering the marketplace. And what do they do? They produce commodities. And why do they do so? Because they want to have more money; that’s it.”

And I would say this is bingo. Right? I mean, the comparison between the two is really capturing, in a very powerful way–right?–the emergence what we understand a capitalist economy–right?–as distinct simply from a commercial society. I think this is a very, very important and very insightful, very simple, very precise, and very persuasive argument.

Now let me just say a few more words about this. Why is this so? Why does a capitalist need more money than it started the process? And I will get into it a bit later in more details. Well there are very good reasons for it. One reason we already mentioned. Why should the capitalist bother–right?–advancing capital and taking risks, unless it is compensated by more money? And that’s in itself a good enough reason.

But there is an even more important reason. We are on a competitive marketplace; in a competitive marketplace, in a capitalist economy–which in Marx’s own words is the most dynamic economy in human history–there is improvement in technologies. The capitalist will create more money because it will have to reinvest this money in the production process. It has to improve its technology; it if would stop to do so, the competition would wipe it out. So the capitalist has to collect–right?–more money than it started the production process. Even the most altruistic capitalist has to collect more money at the end of the process. Even the capitalist who said, “I’m such a good man. All what I’m doing is to creating jobs for those poor, poor people, that they can have a decent living and a nice suburban home. And I don’t want anything in exchange for it. I do it out of altruism.” Okay, let’s imagine our altruistic moneybag. Right? Still the poor guy does not have a chance. It has to collect more money because otherwise next year he will not be around any longer. He cannot be altruistic any longer because the competition will wipe him out. Right? That’s the argument.

Okay. So now here comes Marx. He said, “This is a big change, because now the purpose of production is not satisfaction of needs, but it is really a generation of profit, which is inevitable because competition among capitalists.” Now comes a big puzzle. Where on earth do more money comes from? How is it possible that the capitalist goes out with money, buys commodities, and gets more money at the end? Is the capitalist cheating us? Buys cheap and sells dear? He said, “Well this is impossible. If there would be a capitalist who would buy cheap and sell dear, and would pocket a profit this way, there will be others who will say, ‘Well I will compete and I will sell it less expensively, and I will sell more, and I will create more profit, and we’ll push these artificially high prices down. There is supply and demand which sets the prices’.” So that more money cannot come out of cheating. Right? It simply cannot come out simply for circulation. It somehow has to come out from the production.

Now how can it happen that more money is created? And this is where the idea of labor power as a commodity comes in. What the capitalist does is buys from the marketplace a specific commodity, and this specific commodity is labor market [correction: power]. And labor market [correction: power], so Marx argues, is that commodity–the only commodity–which actually can produce a higher value when it is consumed than its own value. In every other input–right?–raw material, the amount of labor which was put into that raw material, where in a production process you consume it, that is being transferred into value of the new product. So you are producing a refrigerator, you need steel or aluminum to produce it; the value which was put into the production of steel or aluminum will be carried over, exactly the same amount, into the refrigerator you produce. So it cannot create more value. Right? What can create–the only commodity which produces more–is labor power as such.

Well, and this is also important, that Marx suggests therefore what the laborer has to sell cannot be labor, it must be labor power. Well you may be–Talmudistic stuff–right?–this twisting words. But it isn’t. I think there’s an important idea he said. He said if you would sell labor, then–and if John Locke was right and all value is created by the laborer and belongs to the laborer–then the capitalist would have to cheat you. Right? Would not be able to sell–give you the price of your labor; could not have a surplus value or a profit otherwise. Therefore the capitalist will have to buy labor power, the capacity of work. And Marx insists we have to think about a system in which the capitalist price pays the proper price–the exact price, the market price, the right market price–for labor power. The worker is not cheated; the worker is exploited, but that’s not cheating, right?

So why? What is so unique about the labor power? Right? And let me just emphasize, it’s very, very important for these chapters what you have read. That those are always equivalents which have to exchange each other at the marketplace. No cheating. The worker is not being cheated. It gets the proper price for this labor power. So but what is the price of the labor power? It’s exactly like the price of any other commodity; the price of its reproduction. Right? How much labor is necessary to reproduce that commodity. If labor power is a commodity, the price of the labor power is exactly how much is necessary to reproduce that labor power. It involves–right?–the cost of your housing, the cost of your living, and the extended reproduction of labor power. It involves that you have to raise children. It involves education; you know, human capital investment. This all will have to be compensated for the laborer. But if it is compensated, then the laborer is compensated for its laboring capacities, labor power, will work under the supervision of the capitalist, and the capitalist will make sure that the laborer, after the costs of the reproduction of labor power are covered, will work another three or four or five hours, under the supervision of the capitalist, and start producing surplus value for the capitalist, or profit for the capitalist. Right?

That is–right?–a stroke of the genius. Right? That’s the big solution what he’s offering. And this is why I said though there is a heavy–of course he hates capitalism, of course he hates exploitation. But if you look at the logic of the analysis, this is pretty cool-headed analysis and does not imply value judgments. Right? Does not imply moral judgment. You can go through of this to say, “Yes. Why? Sure. That’s it, that’s how the system works.” He does hate it, and as I said he cannot stop, and expresses it.

Chapter 3. Classes in History [00:38:49]

Okay, let me talk about classes very briefly. And now we are back to The Communist Manifesto. And there are really a couple of issues here. He’s talking about classes as a trans-historical category, which in a way is contradictory to the argument of Das Kapital. He’s talking about the bourgeoisie as a new class and as a progressive class. Now let’s look at this, classes as a trans-historical category. Right? This is written almost twenty years before Das Kapital, without the theory of exploitation. And he said the history of all previously existing societies is the history of class struggle. And you remember I said this idea is becoming already in The German Ideology, where he tries to develop these causal mechanisms–right?–which explains evolution in history. And this is class struggle all along. Right? The struggle of the slaves against the slave owners, the serfs against the landlord, and finally it will be the struggle of the proletariat against the bourgeoisie. That’s the idea. Right? And this is being used in a trans-historical way.

The trouble is that this is obviously wrong. It’s wrong in terms of Marx’s own theory of exploitation, and actually it is also empirically a wrong statement. Right? Why it is wrong in terms of Marx? Because it doesn’t fit the theory of exploitation. Right? If exploitation is unique for a capitalist mode of production, reasonably you can talk only about classes in a capitalist mode of production where the labor power is free in the dual sense of the term–legally free and freed from the means of production and therefore has to sell its labor power. Right? If this does not exist, you should not use the term of classes. So this is a contradiction in Marx’s own analysis.

And, of course, it is empirically wrong, because it’s true there were class struggles in history, but was antiquity overthrown by the revolt of slave owners against the slaves? No, it wasn’t. As we have learned from Marx, it fell because it was invaded by Germanic tribes. Did, in the South, slavery end up because the slaves revolted against the slave owners? No. Because capitalists from the North initiated a war against the South. Right? Did the proletariat ever revolt to overthrow the bourgeoisie? Not really. In countries where we are talking about proletarian revolutions, there were hardly any proletarians. How many proletarians were there in China in 1949? It was obviously an overwhelmingly peasant economy. Right? Those were peasant masses who demanded land, who carried out the revolution under the leadership of Mao Zedong. Russia, not much different in 1917. So it’s simply not true.

It’s also not true that the classes which were subordinated earlier will become the new dominant classes. I mean, the slaves did not became the landlords, the serfs did not become the grand bourgeoisie, and the proletariat certainly did not become a dominant class in China or in the Soviet Union. Right? This is all wrong. Right? But the argument is still interesting.

Then most importantly–right?–the bourgeoisie, he said, is a new class, and probably, arguably, the first real class. The landlords were not a class because they were not constituted in economic terms. They were constituted legally–right?–and by customs, rather than simply on market exchange and market competition. And he also said, “Well, this bourgeoisie was an extremely revolutionary force.” Right? “And it actually transformed the whole society.” And here I think there is–even in The Communist Manifesto he contradicts himself. He said, “Well, you know, what it did, it transformed occupations, which were based on honor before, into class positions.” Right? It converted the position of a doctor or a lawyer or a priest into a kind of class-like position. Though their power traditionally was based on honor–they were honorable positions–now they become positions for which an income is being paid. All right.

And then he writes–it’s very important to appreciate that Marx sees that the bourgeoisie did play an extremely important progressive role in history. But it’s not only–he hates the guts of the bourgeoisie for sure, but he appreciates the contribution of the bourgeoisie for the development of modern society. Right? He said, “The bourgeoisie cannot exist without constantly revolutionalizing the instruments of production. Right? “In a scarce one-hundred years has created more massive and more colossal productive forces than we have all preceding generations together.” Well, sounds like somebody who loves capitalism. Right? Though of course he doesn’t, because he thinks it will eventually destroy itself.

Chapter 4. How Many Classes? [00:44:59]

Now the last issue is about how many classes. And well what follows from the logic of Das Kapital, and I think it is also the point of Marx in The Communist Manifesto, there are two classes: the bourgeoisie and the proletariat. Right? The moneybags and the workers. And the workers are exploited by the moneybags, and that’s the reason for class struggle, and that’s what eventually will lead to revolution. But my goodness, where are the middle classes? There were not all that many proletarians in 1867. There was no society, except industrialized Soviet Union, where the majority of the population was industrial worker, but no ruling class. They were exploited and screwed, don’t worry about it. But they were in majority. But it never happened in Western societies. We never reached a point–and then, of course, the industrial working class has been declining. Now, properly speaking, the industrial working class in the United States is probably not more than 15% of the population. So where is the middle class? So well I don’t have much time. Let’s rush through of this.

Well he said there is, you know, these elemental confrontations between the bourgeoisie and the proletariat. Well he does not have the theory of exploitation; he cannot explain it quite well. And you can do it by now, armed with Das Kapital. Right? This is a contradiction because, you know, the proletariat has no choice but sell its labor power and be exploited. And this is, of course, an irreconcilable contradiction. And what about the middle class? Well Marx said “Yeah…” Well he is–of course even in a political pamphlet–he is a good enough scientist, social scientist, that he will say, “No, there is no middle class.” He knows there is a middle class–that most people do not belong to the bourgeoisie, and the proletariat in 1848. And, as I said, they never did. But he said, “Well, but look at it historically. What we call middle class is disappearing. Look at all those peasants and small artisans and small merchants, they will all disappear, and they will all have to either–very few of them will become big capitalists, and the overwhelming majority of them will become working workers.”

Well this is not without insights. Right? For about a hundred years after The Communist Manifesto the trend was going in this direction. Right? Self-employment was shrinking, and the wage labor was increasing. Right? In big ways. Right? In the mid-nineteenth century 70 to 90% of the population was working in agriculture and was self-employed in other businesses. Right? Today in the United States the agricultural population, I don’t know the exactly the most current figure is somewhere between 1 to 2%. Right? And self-employment has been substantially reduced for a very long time.

But things happened what Marx did not foresee. Right? And what he did not foresee were–and I probably will leave it here; there are two things what he did not really foresee. One, that actually this trend turned around. There is no more reduction of self-employment; in fact, there is some increase of self-employment. It varies from countries to countries. In Japan, big way. Right? In the United States some improvement in self-employment. But self-employment is stubbornly resistant. Right? You have supermarkets, but you always do have your corner deli shops, and they don’t seem to be disappearing. Right? I even take my shoes to a shoemaker to fix them. Right? So I mean, I do not throw my shoes out, I go to a shoemaker and they fix it for $25.00 for me, and I don’t buy a shoe for 150 bucks. Right?

So, I mean, there is–mass production has its limits. Right? There is a quality production–right?–by artisans, and we want that quality production. And the more important argument: in fact, Marx conceptualized wage laborers as physical laborers. Physical laborers, as I pointed out, manual laborers, at least in advanced countries, is this minority of the society. In the globe, that’s different–right?–because manufacturing and industrial activity was kind of decentralized in the world, into the Third World. But in the United States and in Continental Europe it’s a thriving minority. But there is a big new middle class, and this new middle class are those white collar workers, like most of you will become and what I am. Right? I mean, I’m–it’s not white–right?–the collar. Right?

But so that means, in Marx’s sense, I hardly do any work. Right? What kind of value do I create? Right? What does it mean? I am exploited? Well I don’t think Rick Levin really exploits me. Am I an exploiter? No I don’t think I exploit you guys. Or do you exploit me because I have to stay up until midnight to grade your assignments? No, it’s not really. I actually occasionally have fun reading your assignments. Right? So we have a new middle class–right?–which simply does not fit the analysis, and where the notion of exploitation loses its insight. Okay, I’ll leave it here. Thank you.

Most of the lectures and course material within Open Yale Courses are licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 license. Unless explicitly set forth in the applicable Credits section of a lecture, third-party content is not covered under the Creative Commons license. Please consult the Open Yale Courses Terms of Use for limitations and further explanations on the application of the Creative Commons license.